Central Lonsdale St building fetches $32.6m

The 413 square metre site was marketed for its development upside.

An under-utilised commercial investment at the busy pedestrian crossing which connects shopping centres Melbourne Central and Emporium Melbourne, has sold for $32.61 million.

The buyer of 272-282 Lonsdale Street is a private investor who splits their time between Australia and China.

The asset earns over $1 million per annum from retailers and a rooftop sign.

The result reflects a three per cent net passing yield.

Nine other suitors submitted offers following an expressions of interest campaign which closed on October 12.

Colliers’ Oliver Hay, Daniel Wolman, Matt Stagg and Leon Ma with JLL’s Josh Rutman, Nick Peden and MingXuan Li represented the vendor, which paid $5.566m in 2003.

Development upside

The two storey brick building abuts the Melbourne Central car park, near QV.

GPT, which owns the neighbouring Melbourne Central, might have thrown its hat in the ring.

Abutting the shopping centre’s car park, 272-282 Lonsdale St would have extended its land holding 413 sqm; the institution has previously proposed making better use of the complex’s airspace, including over 10 years ago, with a Little Lonsdale St office.

Developed in 1978, the asset could also have boosted the manager’s income by c$1.003m per annum from five tenancies – four ground level shops and a first floor restaurant – and a rooftop sign (story continues below).

The property has independent development upside too – for a skinny skyscraper.

It fronts Sniders Lane as well.

The lease expiry profile is staggered, the agents said, with vacant possession available in 2027.

Alternatively, they added, it is a strong passive investment, with the potential for rental growth following a refurbishment.

“Most notably, offshore buyers are showing a strong appetite for the Melbourne CBD, with 73pc of all freehold sales in 2022 purchased by international capital,” according to Mr Peden.

“As the foreign exchange rate remains attractive to these overseas groups, JLL expects this trend to gain further momentum as vendors look to crystalise substantial value growth from their CBD assets,” he said.

The sale comes five months since Longriver sold a 280 sqm A’Beckett St block permit-ready for a nine storey retail building.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.